by Dave Zornow
The tables have been turned on the ratings business.
Predicting that “Nielsen should score big audience ratings on Wall Street,” the NYT thinks the private equity team which took the former VNU company private four years ago has done a good job — and will be rewarded with a successful IPO of up to $1.75 billion. Nielsen’s SEC filing says they plan to use the proceeds to reduce its $8.6 billion debt and “general corporate purposes.”
Here’s the “by the numbers” analysis of Nielsen’s numbers:
- Nielsen takes in about $4.8 billion in revenue each year from nearly 100 countries.
- In 2006, former GE Exec David Calhoun and a group of private investment firms including Blackstone Group, The Carlyle Group and Kohlberg Kravis Roberts bought Nielsen from VNU for about $10 billion.
- Calhoun and company injected another $3 billion in capital into the business, buying up new properties like IAG, mobile measurement firm Telephia and video analytics company GlanceGuide. They also shed non-core assets like Nielsen EDI (sold to Rentrak) and a long list of venerable publications, closing Radio & Records and Editor & Publisher and selling Billboard and The Hollywood Reporter to e5 Global Media. According to the WSJ, Nielsen also cut 10% of their staff after the buyout.
- Nielsen earned about $1.3 billion last year compared to $879 million four years ago.
Where the NYT is bullish on Nielsen’s IPO prospects, a skeptical WSJ calls “bullsh1t.” Noting that Nielsen was acquired in a pre-Twitter and Facebook(-dominant) world where they now trail comScore in Internet measurement, the Wall Street Journal’s Michael Corkery blogs that “anytime savvy investors – such as KKR, Blackstone and Carlyle Group – are selling out in a volatile stock market — potential investors should be asking themselves why.”
At the end of the day, Van Morrison may have the last word on the success of Nielsen’s planned IPO.
In the song “Wild Night,” Morrison writes “…and all the girls walk by dressed up for each other.” If you substitute private equity firms for girls you get some insight into how The Street views Nielsen’s IPO. “An initial offering that comes close to doubling their money would also help dispel criticism that buyout firms are nothing more than undertaxed financial engineers,” says the New York Times.
If anyone has a reality show treatment called “Pimp My Ratings Company” in the works, this would be a great time to do some lunches.
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